The shares of the banks fell briefly on Thursday after the independent investigative journalist, Aniruddha Bahal, made the accusations in a news conference televised by a local TV station in the morning.

Bahal, founder and editor-in-chief of Indian news and opinion website Cobrapost.com, said he had collected hundreds of hours of video recordings from "dozens and dozens" of bank branches across the country. He did not say when the recordings were compiled.

An article on the website posted on Thursday said an associate editor, using an alias and pretending to work for a fictitious politician who wanted to launder money, sought advice from bank officials on how to do it.

The article said branches across all the three banks suggested laundering methods that were "imaginative in their range and brazen in their approach."

In one case, Bahal said, a video excerpt on his website showed an HDFC Bank official explaining to an undercover reporter for Cobrapost.com different methods to launder money. It said Cobrapost.com offered to hand over the videos to law enforcement officials or regulators. The article did not say if the recordings were eventually passed on to the authorities. Market regulator Securities and Exchange Board of India had no comment on the matter, according to a spokesman.

'Deeply concerned'

ICICI Bank told Reuters that it was "deeply concerned" about the accusations. In a statement, it said: "ICICI Group conducts its business with the highest level of compliance to legal and regulatory requirements. All employees of the Group are trained and required to adhere strictly to the Group Code of Conduct... We have demonstrated our commitment to this by following a zero tolerance policy towards any violation."

"We have constituted a high level inquiry committee to investigate into the matter and submit its findings in two weeks." HDFC Bank was investigating the matter on "top priority." "Any deviation is viewed very seriously and stringent action is taken both at an organizational and employee level," the bank said in a statement.

Axis Bank also said it would investigate.

"Axis Bank has systems and processes that are robust and fully compliant with extant regulations. We will examine whatever information that is brought to our notice and investigate thoroughly," the bank said in a statement.

Axis Bank shares rose 1.1% as after earlier dropping as much as 3.5%.

ICICI Bank shares gained 2.3% after earlier falling over 2%, while HDFC Bank was up 1.7%, also recovering from earlier declines.

The shares recovered after government data showed core inflation rose less than anticipated, reinforcing expectations that the central bank will deliver an interest rate cut next week to boost the economy.